Financial markets review – July 15 2016

Monday 11 July

• The June business sentiment reading from France came in unchanged at 97. Over in Italy the latest industrial production data was seen as disappointing (-0.6% MoM vs. +0.1% expected).
• The US June labour market conditions index fell by 1.9pts following a 3.6pt fall in May.

Tuesday 12 July

• In the US, the NFIB small business optimism survey rose by 0.7pts to 94.5 (vs. 93.9 expected) which is the best reading since December 2015. The JOLTS report for May revealed a near 300k decline in job openings during the month to 5.5m (vs. 5.65m expected). Wholesale inventories rose a little less than expected in May (+0.1% MoM vs. +0.2% expected) with trade sales (+0.5% MoM) printing in-line with expectations. The Atlanta Fed revised down their Q2 GDP forecast to 2.3% on account of that data.
• There was little to report in Europe, the only data being the final German CPI revisions where there was no change to the +0.1% MoM.
• German Chancellor, Angela Merkel, said ‘intensive talks’ are in progress between the Italian government and the European Commission over a solution to Italy’s banking issue. Merkel believes that they will reach a positive resolution.

Wednesday 13 July

• Dallas Fed President Kaplan said that the recent US employment report shows signs of progress in reducing labour market slack but that a ‘slow, gradual, careful’ approach to raising rates is still appropriate.
• US Import prices rose a less than expected +0.2% MoM in June (vs. +0.5% expected) with the YoY rate now at -4.8% from -5.0%. The June Monthly Budget Statement revealed a smaller than expected surplus during the month ($6.3bn vs. $19.0bn expected) with receipts down -3.9% YoY.
• The Bank of England released its Q2 credit conditions survey. The main take away from the summary was the reference to the outlook post BREXIT with the summary revealing that major UK lenders expect the availability of secured credit to be little changed in the near term but the demand for secured credit to fall.
• France revised down their final June CPI print to +0.1% MoM from +0.2%. More notable was the weaker than expected Euro area industrial production report for May (-1.2% MoM vs. – 0.8%) which has resulted in the YoY rating fall to +0.5% from +2.2%.

Thursday 14 July

• Bank of England kept the current interest rate unchanged at 0.50% following the MPC meeting.
• In the US, June PPI readings came in a little higher than expected. Indeed the headline print of +0.5% MoM was above consensus and so lifted the YoY rate up to +0.3% from -0.1%. The core ex food and energy reading of +0.4% MoM (vs. +0.1% expected) was also well above expectations. Last week’s initial jobless claims data came in unchanged at 254k which lowered the four-week average to 259k.

Friday 15 July

• In China, the Q2 GDP report showed growth is holding steady at +6.7% YoY. Market expectations were for +6.6%. It also keeps China’s economy on track relative to the government’s growth target of 6.5%-7.0%. June activity data was a bit more mixed.
• In Europe the final June CPI report for the Euro area was unchanged, with the +0.2% MoM headline reading as expected.
• In the US, the core CPI for June came inline with expactions at 0.2% MoM, whilst retail exceeded expectations showing 0.7% growth for the same period, compared to the forecast of 0.4%.